Subsidizing the Acquisition of Small Farms

Agricultural policy is not sexy. You probably don’t know the intricacies of “loan deficiency payments” or “base acreage,” and you probably don’t care. This was once an agrarian nation, but now there’s a less than 1% chance that you’re a farmer, and if you are, you’re probably part time; the average farm family gets 82% of its income from nonfarm sources. We’re not a people of the soil anymore, and for most of us, our eyes glaze over when we see farm statistics like the ones in that last sentence.

But farms still cover most of our land, consume most of our water and produce most of our food. If you eat, drink or pay taxes–or care about the economy, the environment or our global reputation–U.S. agricultural policy is a big deal.

It’s also a horrible deal. It redistributes our taxes to millionaire farmers as well as to millionaire “farmers” like David Letterman, David Rockefeller and the owners of the Utah Jazz. It contributes to our obesity and illegal-immigration epidemics and to our water and energy shortages. It helps degrade rivers, deplete aquifers, eliminate grasslands, concentrate food-processing conglomerates and inundate our fast-food nation with high-fructose corn syrup. Our farm policy is supposed to save small farmers and small towns. Instead it fuels the expansion of industrial megafarms and the depopulation of rural America. It hurts Third World farmers, violates international trade deals and paralyzes our efforts to open foreign markets to the nonagricultural goods and services that make up the remaining 99% of our economy.

Ever since the 1980s, when a wave of foreclosures inspired those iconic Farm Aid concerts, the media’s sporadic reports from farm country have tended to focus on floods, droughts and other disasters. But the farm crisis is as over as Barbara Mandrell. Farm incomes are at an all-time high. The median farmer enjoys five times the net worth of the median nonfarmer household. Crop prices have soared–thanks largely to the Federal Government’s promotion of corn ethanol over more efficient renewable energies–and yet subsidies have as well.

Nevertheless, Congress is finalizing a $286 billion farm bill that will continue our basic farm policies, which means it will keep funneling money to farmers and pseudo farmers through a bewildering array of loans, price supports, subsidized insurance, disaster aid and money-for-nothing handouts that arrive when times are tough–or not tough. “What a joke,” grumbles Congressman Ron Kind, a Wisconsin Democrat who led a failed bipartisan reform effort in the House. “You’re eligible as long as you’re breathing.” Actually, that’s not quite true. Since the vast majority of the cash goes to five row crops–corn, soybeans, wheat, cotton and rice–more than 60% of our farmers receive no subsidies. And a recent Government Accountability Office report identified $1.1 billion of subsidies whose recipients were no longer breathing.

Franklin Roosevelt’s Administration started farm aid in response to the Dust Bowl and the Depression, calling it “a temporary solution to deal with an emergency.” But in Washington, the emergency has never ended. The government still gives farmers your money–more than ever over the past decade–along with research projects to expand their yields, restoration projects to clean up their messes, flood-control and irrigation projects to protect and enhance their land, visa programs to supply them with cheap labor, ethanol mandates and tariffs to boost their prices, and tax breaks by the bushel.

The bipartisan farm bills that Congress passes every five to seven years reflect the power and savvy of the farm lobby, which parlays cue-the-violins stereotypes of struggling yeomen into giveaways to the planter class of the South and Great Plains. In reality, the top 10% of subsidized farmers collect nearly three-quarters of the subsidies, for an average of almost $35,000 per year. The bottom 80% average just $700. That’s worth repeating: most farmers, especially the small farmers whose steadfast family values and precarious family finances are invoked to justify the programs, get little or nothing.

This summer an unprecedented coalition, running the gamut of the advocacy world from rural development to health to business to the environment, emerged to help Kind and Republican Jeff Flake of Arizona try to shake up the system. Editorials thundered for reform, and House Speaker Nancy Pelosi of San Francisco–the city of organic kale and “meat is murder”–vowed to deliver it. The moment seemed ripe for Democrats to challenge the status quo. Agribusiness was steering two-thirds of its campaign donations to Republicans, and just 19 of the 435 congressional districts were vacuuming up half of all subsidies. Still, House Agriculture Committee chairman Collin Peterson of Minnesota had a warning for Kind. “I told him, ‘Ron, you’re a good guy, but you’re way out of your league here,'” Peterson told TIME. “I knew we were going to kick his butt.”

He was right. Pelosi sided with the American Farm Bureau, the National Farmers Union and the Big Five commodity lobbies, spearheading a bill she called “a first step toward reform,” an oblique way of saying it isn’t reform at all. The Big Five would still hog the subsidies, while the influential sugar industry would retain its lucrative price supports. The one major “reform” was that farm families earning at least $2 million a year would supposedly be ineligible for subsidies, assuming none of them knew decent accountants.

The story of this butt-kicking is a quin-tessential Washington tale, illustrating how a single special interest with a single-minded devotion to a cause can trump a broad coalition and the national interest. The Senate is considering a similar bill, and a reform effort led by Republican Richard Lugar of Indiana seems likely to meet a similar fate. The Bush Administration has made noises about a veto; Kind says the President, famously reluctant to admit mistakes, confided in a private chat that he regrets signing the lavish 2002 bill. But it’s never wise to bet against the farm lobby, which spent $135 million on lobbying and donations last year and brilliantly portrays opponents as enemies of the heartland of America. “The game is always the same,” says Oxfam America’s Jim Lyons, a former U.S. Agriculture Under Secretary. “The big commodity groups have a stranglehold on policy. And there’s not a lot of stomach for new ideas.”

‘Look What’s Happened.’

OUR CULT OF THE SMALL FAMILY FARMER dates back to Thomas Jefferson, who hailed humble “cultivators of the earth” as America’s “most valuable” and “most virtuous” citizens. Politicians still paint American Gothic portraits of the country folk who toil in the soil to grow our food and fiber. But at the Husker Harvest Days farm show in September in Grand Island, Neb., it was clear how far American agriculture had come from the days when Cornhuskers husked corn by hand.

The farm show looked like a state fair but felt like an industry expo, with barkers urging visitors to increase productivity or cut costs rather than ride a pony or eat corn dogs. John Deere salesmen showed off their largest machinery ever, including a 530-horsepower tractor and a combine that costs $410,000 fully equipped. At the Firestone tent, a rep said the company is preparing a 91-in. (230 cm) farm tire, taller than Yao Ming. TopCon Precision Agriculture exhibited GPS gadgets that adjust your spraying and watering according to the topography of your fields and can even steer your tractor. ADM Financial advisers showed how to hedge risk in futures markets, while a lecturer at Monsanto’s Biofuture tent touted drought-tolerant corn: “We’re in a brand-new world here, folks! You’ve got to get more production out of every acre just to keep up!”

Jefferson’s “cultivators of the earth” didn’t have genetically engineered seeds or 530-horsepower tractors. They had 1-horsepower horses. And they didn’t have subsidies either. In fact, most antebellum farmers opposed all federal aid to private enterprise, assuming it would just enrich manufacturing élites. The lesson of Husker Harvest Days is that modern farmers–at least the ones with most of the land and subsidies–are a new manufacturing élite. They just happen to be manufacturing food and fiber. Production agriculture is a high-tech, globalized business with economies of scale. You don’t buy a $410,000 combine to farm the back 40.

But it’s hard to start big, which is why agriculture has the kind of demographics that cancels sitcoms: only 6% of farmers are younger than 35, while 26% are over 65. “It’s damn near impossible to get started today,” Craig Ebberson says during a tour of the endless rows of corn and soybeans he farms with his sons near Randolph, Neb. “Farms are getting bigger and more efficient, and that’s not going to stop.” The Environmental Working Group’s farm-subsidy database shows that Ebbersons in the area collected $3 million in crop aid over the past decade. Craig used that money to snap up more land, expand his feedlot, invest in a nearby ethanol plant and buy gizmos that track his fertilizer and pesticide use and the food and drug intake of every cow. It’s no accident that agriculture’s productivity growth consistently outpaces the rest of the economy–or that farms with million-dollar revenues are the fastest-growing agricultural sector. “We started with a corn knife and a scoop shovel, and look what’s happened,” he chuckles.

What’s happened is, some farm families got big, but more got out. Subsidies have helped finance the expansion plans of the big guys while inflating the rents of the little guys. Ebberson’s neighbor Mike Korth has a 1,000-acre (400 hectare) corn and soybean spread that would have been considered enormous a century ago but is now about average for the area. His township has only 39 families on 36 sq. mi. (94 sq km), a frontier-level population density. No wonder a Federal Reserve Bank of Kansas City study found the rural counties most dependent on subsidies had the worst population losses and the weakest job growth.

“We’re killing what made America great,” says Korth, an intense 50-year-old who looks like a miniature Mike Ditka. Randolph’s school district has dwindled from nearly 1,000 students to fewer than 400. It’s adopted a four-day week to save money and might switch to eight-man football. The town has lost its Ford, Chevy and Chrysler lots, all its implement dealers and lumber yards, its creamery, jewelry store and movie theater. “The big farmers took over, and it’s killed small business,” says Paul Loberg, who runs a welding shop off Main Street. “All they need downtown is coffee and beer. They can’t buy that by the truckload yet.”

Subsidies aren’t the only cause of expansion, but they do “wed farming regions to an ongoing pattern of economic consolidation,” concluded the Kansas City study. Nebraska’s Center for Rural Affairs found the 2002 farm bill–the Farm Security and Rural Investment Act–spent six times as much on subsidies for the state’s top 20 farmers as on rural development programs for the 20 counties losing the most population. And the South’s cotton and rice farmers get even fatter checks than Middle America’s grain farmers, which is why Korth managed to persuade the Nebraska Farm Bureau to endorse limits on payments to rich farmers, even though the national Farm Bureau aggressively opposes them. “Wealth has a natural tendency to concentrate,” says Chuck Hassebrook, the center’s director. “But why reinforce that? Shouldn’t government try to offset that?”

Modern agroindustrialists are perhaps even more admirable than the modest ploughmen of yore. They’re still family farmers who like to play in the dirt–only 2% of our farms are corporate-owned–but they also have to be land managers, soil scientists, hydrologists, veterinarians, mechanics, commodity traders, exterminators, meteorologists and highly sophisticated businessmen. The question is, Why do they need our help when they’re doing so well? Agriculture Secretary Mike Johanns, a former Nebraska farm boy who is running for Senate, put it this way in an interview hours before he announced his resignation: “Congratulations! We celebrate your success. You don’t need subsidies anymore!”

An Imperfect System

IN JEFFERSON’S DAY, 9 OUT OF 10 Americans cultivated the earth. When Abraham Lincoln created the U.S. Department of Agriculture, half the country still farmed. He once said farmers were “neither better nor worse than any other people,” just “more numerous.” (They also received inordinate political flattery, “the reason of which I cannot perceive, unless it be that they can cast more votes.”) Under F.D.R., 1 in 5 Americans was still a farmer.